Modular blockchain has been a popular term that is used in the crypto space as growing innovations occurred around the blockchain infrastructure space.
While most investors try to capitalize on this trend, most of them still don’t really know what modular blockchains are and what the term refers to.
In this article, we will be talking about what modular blockchains are and what are some of the examples of it that is currently attracting many investors with its innovations.
What are Modular Blockchains?
Modular blockchains are innovations that create a new mechanism in a blockchain infrastructure that makes the blockchain itself more efficient.
It basically means that the blockchain has more than one layer on it, so every task is separated into each layer.
This is different from older generation blockchains such as Bitcoin, which implemented a monolithic approach which is the opposite of modular.
Monolithic means every task on that blockchain is being done on only one layer so the blockchain tends to either be slower or more expensive to process transactions compared to other ones that implement a modular framework.
For example, Bitcoin implements a monolithic architecture, where the validation process is done in one layer as well as the data storing process, making the blockchain non efficient, slow, and has high fees.
This problem is solved by other blockchains through the modular architecture, where for example, the transaction executions happen in one layer and the data storing layer happens in another.
Examples of Modular Blockchains
A lot of newer generation blockchains have implemented modular architecture, even the old ones that are trying to innovate such as Ethereum.
Ethereum
After The Merge upgrade which happened in 2022, Ethereum changed its whole infrastructure from being a Proof of Work Monolithic Blockchain to a Proof of Stake Modular Blockchain.
This is done by doing a hard fork, which is a way for the core developers to move all the data from the old blockchain to a new blockchain, so the Ethereum Blockchain still continues to process the same data as before but with different mechanisms.
Through the upgrade, Ethereum now has two layers prior to having one before, which is called the Deneb and Cancun layer.
The Deneb Layer is a consensus layer where the validators validate every transaction requested by users through the smart contract and the Cancun Layer is an execution layer where the execution and storing of those validated transactions occurred.
By splitting the task, Ethereum has now been more efficient, processing data much faster than before with much lower fees.
Cosmos and Polkadot
Another example is Cosmos and Polkadot that implemented a modular architecture where they have their own blockchain to process their own transactions, as well as other layers for communications with other blockchains as well as for developers to build their own chain on top of them.
Cosmos implements a Hub where Polkadot implements a Parachain mechanism, but both are considered a modular blockchain due to the multi layer architecture that both have.
Both of them are similar in the sense that each layer has its own individual purposes making the blockchain more efficient and have more functionalities than older blockchains.
Dymension
Dymension is a newer blockchain that implements a modular architecture. It has three layers which are called settlement layer, application layer, and data availability layer.
The settlement layer acts similar to the consensus layer on Ethereum, in the sense that the layer is used to settle transactions through its consensus mechanism, which means that in that layer transactions are being validated.
The application layer acts as an interaction layer where users interact with the DApps or decentralized applications that are built on top of Dymension on that layer.
The layer also acts as a development layer for developers who are building DApps on it, making it an interaction layer overall.
Lastly, the data availability layer acts as a storage layer for saving and finding data that are used and collected on the Dymension Blockchain.
Conclusion
Most of these blockchains have managed to process transactions higher and faster than older generation ones.
That is why currently the trend is shifting towards modular blockchains, hence why investors need to capitalize on it.
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